Wednesday, November 29, 2023


As RPEC reported previously, PEBB is scheduled in increase premiums dramatically in January of 2018. They attribute the increase, in large part, to the significant jump in specialty drug costs. Since the board passed the resolution, we have requested information on how premiums are determined and have received the following information:

FROM PEBB STAFF: How PEBB medical premiums are determined

Your PEBB medical premium (your monthly cost for health insurance) is determined by several factors—here’s how it works.

Every year, the Legislature sets the funding levels for:

  • How much state agencies and higher-education institutions will contribute toward their employees’ PEBB health care coverage.
  • The maximum allowed monthly subsidy (currently $150/month) for Medicare retirees’ monthly premiums (which the PEB Board usually supports).

Note: K-12 and employer group employees’ premiums are determined by their employer. Retirees not enrolled in Medicare do not receive a monthly subsidy from the state.

Each spring, the HCA and the medical plans negotiate premiums based on the funding levels. First, proposed premiums are submitted to the PEBB Program. These premiums are based on the plans’ health care costs for previous years and their total cost estimates of the upcoming year’s services. Total costs depend on estimates of how many people will enroll in each plan, how often they go to the doctor, which services they need, and how much those services cost.

When the PEBB Program and the plans agree on the proposed premiums, the premiums are presented to the PEB Board, which votes on them to set premiums for the upcoming calendar year.

Throughout this process, the goal is to provide better health and better care at a lower cost. For example, HCA has quality measures in its contracts with the medical plans to make sure your care meets certain standards. Wellness programs like SmartHealth focus on improving member health, which will lead to lower health care costs in the future. The PEBB Program is also studying strategies to moderate the increasing costs of prescription drugs.

Many factors affect your medical premium, but the PEB Board and PEB Program are always working to lower costs while providing high-quality care to meet your needs.

RPEC believes that we must move forward in two ways to address these skyrocketing health care premiums. First, we must get legislation passed to increase the $150 state Medicare supplement which was cut several years ago. Secondly, we must move discussions forward inside PEBB to use the massive buying power to push back on pharmaceutical costs in our state. Both of these items were acknowledge by the PEB Board at the last meeting and we must ensure they happen.

Here is a comparison of the various PEBB Medicare Plans.

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